The Economics of US Healthcare – Gilbert G. Berdine, M.D. – Mises Daily

A common misconception is that Medicare is a healthcare provider. The reality is that Medicare does not provide a single cent of healthcare. Medicare guarantees payment for certain services under certain restrictions. If either the payment becomes too low or the restrictions become too onerous, the healthcare for elderly people will vanish.

A far more damaging myth is that Medicare is a health-insurance plan for the elderly. Medicare is not insurance. Medicare is a scheme to socialize the healthcare costs of the elderly to the much larger group of working people. Medicare is not even a fiscally sound scheme to socialize costs; Medicare is a Ponzi scheme. Lest anyone think my characterization is hyperbole, here is what the US Securities and Exchange Commission states about Ponzi schemes:

What is a Ponzi scheme?

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.

Why do Ponzi schemes collapse?

With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.

The new investors are new workers entering the labor force. The promised return on investment is that healthcare will be paid for starting at age 65. Rather than funding a defined-benefit pension plan, the monies paid in are spent immediately for elderly beneficiaries, and anything left over is lumped together with general revenue. This particular Ponzi scheme is collapsing due to a large number of baby boomers cashing out. The Ponzi nature of Medicare has completely distorted the American view of insurance beyond recognition.

via The Economics of US Healthcare – Gilbert G. Berdine, M.D. – Mises Daily.


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